comparative resale values of sports cars [Archive] (2024)

miatarchy03

8th June 2004, 14:39

(The message below got no response when I posted it in "Car Talk" suggesting I was put it in the wrong forum. So I bring it over to the NB board:)

The May issue of Sports Car International contains a feature called "Market Report" which evaluates the market in late model Miatas(1999-2003); Z3s(1997-2002); Boxters (1997-2003); Mercedes SLKs (1998-2003); Honda S2000s (2000-2003); and Toyota MR2s (2000-2003). Though these cars represent different price ranges, each is an two seat roadster, originally offered with a four cylinder engine (except the Boxter which always had a six), from 1.8-2.5 liters.

Most of this is subjective, but there is an interesting chart comparing the MSRP for each of these cars in 2000 (the earliest year each of them was made) and their current market value. The depreciation loss ranges from 42% (Mercedes) to 37% (Z3 and S2000). Miata is midpack with 40%.
(No one would've predicted 20 years ago that Mercedes would out-depreciate all the competition.)

But I have a question: is this accurate? It tends to ignore how different models are equipped (it looks to me like they used base MSRP). It also tends to ignore dealer discounting. In April I bought an '03 base model for $6200 off list price. If I take the NADA book seriously, my car has appreciated in value (I do not take it seriously). As a new owner, I ask those with more experience: What is the true retained value of Miata vs. its competion?

panos

8th June 2004, 14:55

Flighttester

8th June 2004, 15:14

It would seem if you bought a 2003 in April of this year, there has already been at least a year of depreciation deducted and just because you didn't pay list, that don't mean there was no depreciation.

I think the only fair way to judge the comparative value of these cars and the depreciation rate is to start with the list price.

Consideration for the lack of sales at that price might be factored in, but there is no way to do it fairly otherwise.

If Chevrolet is asking $30,000 for an Impala but no one is actually willing to pay that much for one. The Impala isn't a good deal at $28,000. It's only a good deal at whatever a number of buyers is willing to pay for it. If you can't give 'em away at $25,000, $28,000 is over priced, no matter what the factory list may be.

That is the fault of the factory artificially setting a price that is perhaps knowingly too high, figuring that the huge rebate will be a sales tool.

Huge rebates just indicates to me no one wants what you are trying to sell.

extreme

8th June 2004, 16:23

As a rule of thumb cars depreciate about 50% in 3-4 years for domestic (American made) cars and 4-5 years for import cars. So those figures are about right.

Now with MSRP and rebates, low financing, etc. what is the true price MSRP of the car when the math is being done?

Right now IMHO, sports cars might deprecated rapidly because the baby boomers all need and want SUV right now and therefore in the used car market are holding value whereas sports cars are losing value. But I believe used cars in general are depreciated repaidly simply because with low interest rates, and large rebates, it is cheap, via a monthly payment to buy a new car, why drive a used car and have to pay cash (in some circ*mstances) vs low monthly payments on a new car?

Cliff Knight

8th June 2004, 17:22

Originally posted by extreme:
As a rule of thumb cars depreciate about 50% in 3-4 years for domestic (American made) cars and 4-5 years for import cars. So those figures are about right.

That why I always laugh myself silly (sillier?) whenever anyone talks about an automobile as "an investment"...

dkap

8th June 2004, 19:01

No one would've predicted 20 years ago that Mercedes would out-depreciate all the competition.I don't know about that. The higher the price of the car, the more room it has to drop. Being desirable even when old and used up, they probably won't bottom out like a Corolla, but they'll still see their fair share of percentage drop.

Dan

Flighttester

8th June 2004, 21:04

You're right. Zero value is is zero, no matter what the initial cost.

But then, I once owned a '70 Camaro SS 350 with all the performance bits. It cost me $3,400 new, and I've seen very good examples configured like mine was go for close to nine or ten times that today.

That is as near to a low cost, good return 'investment' as anything can be. And you can have some fun with it too.

Most vehicles are better thought of as expendable fun machines rather than an investment.

I'll let the museums handle the 'save 'em for posterity' issues. I prefer to use cars as they were intended and hope something even better is available when my current one is used up.

Originally posted by dkap:
No one would've predicted 20 years ago that Mercedes would out-depreciate all the competition.I don't know about that. The higher the price of the car, the more room it has to drop. Being desirable even when old and used up, they probably won't bottom out like a Corolla, but they'll still see their fair share of percentage drop.

Dan

mcfandango

8th June 2004, 23:33

miatarchy03

9th June 2004, 08:25

“It would seem if you bought a 2003 in April of this year, there has already been at least a year of depreciation deducted and just because you didn't pay list, that don't mean there was no depreciation.”

Point well taken, and the process of discounting superceded models is as old as the industry. But from my standpoint, “depreciation” of my car is measured from the amount it cost me new. This is a very different figure from MSRP. When someone, five years from now calculates the depreciation of 2003 Miatas, they’ll probably do it the same way this magazine calculated the depreciation of 2000s. And that will overstate their depreciation vis a vis other makes. Though it may’ve been possible to find discounts on 2003 S2000’s, Boxter’s, MR2s, and SL’s, I’m fairly sure they weren’t discounted 25% as the ’03 Miatas were.

“As a rule of thumb cars depreciate about 50% in 3-4 years for domestic (American made) cars and 4-5 years for import cars. So those figures are about right.”

Based on the standard method of calculating depreciation, and that rule of thumb, I should expect my $24,000 (MSRP) Miata to be worth $12,000 in 5 years (I’m rounding off here). But since I paid only $18,000, my true depreciation would be 33% rather than 50%. Of course anyone who buys another late-in-the-model-year-or-early-into-the-next model from another manufacturer will experience the same benefit, but it seems to me the dealer has swallowed the first $6,000 or 25% of depreciation for me, and that much is unusual.

I think you agree with my real point: that the standard method of calculating depreciation is really just a ballpark figure that overestimates the depreciation of some models, specifically Miata’s if this type of discounting is done by Mazda often. If a large number of 2000 models were sold like the 2003 I bought, then Miata should be crowned the depreciation champion of that chart rather than the mediocre placement it got. And yes, I realize that depreciation is only one component in total cost of ownership, but I think Miata’s should do very well against the other roadsters in things like insurance, gas mileage, maintenance, etc.

Philpug

9th June 2004, 10:30

Originally posted by extreme:
As a rule of thumb cars depreciate about 50% in 3-4 years for domestic (American made) cars and 4-5 years for import cars. So those figures are about right.

Used to be the rule... now domestics 50% in 24-30 mo and imports 36-42 mo. Just one persons opinion who looked it up in ALG leasing guides.

Flighttester

9th June 2004, 10:45

Yeah, in general I agree.

But, I mostly keep a car a long time, much longer than the steep slope in the depreciation rate, so the initial cost is not as big a factor in total cost of ownership.

I just bought my '00 SE for a little over $16,000. It was essentially like buying new, without a new-car warranty, since it had only 4,400 miles on it when I took delivery.

I looked at brand new ones before I bought and I decided I liked the looks and features of the '00 more than I needed the warranty and the local dealer didn't have anything new for less than about $19,000 and those weren't configured anything like my SE.

I sold my venerable, though great fun, '87 RX-7 Turbo II when I got the '00 MiataSE. I had that car in my fleet for enough years that it cost me less than $1,000 a year to operate it, not counting fuel and maintenance.

I'm not complaining about that at all.

I only hope I can do as well with the MX-5.

oaksmith

9th June 2004, 21:54

Flighttester

10th June 2004, 09:23

Perhaps, but compared to anything else I looked at, it was reasonable enough to me.

I've never seen a better 4-year-old car in better condition.

I wanted the 6-speed gearbox and Torsen and I really liked the rest of the car. If a current base model was going for $19,000 and up, which is what I discovered, the older SE was easily worth $16,000, to me anyway.

It is the same as new to me and everybody thinks it's brand new when they see it, cause it looks it.

I prefer the front styling of the '99-00 better than the more pointed air inlet of the '01 and up. The rest of the body stying is essentially identical.

Mechanically, I am pleased with the slightly simpler compromises of the '00 and since it is partially intended as a daily driver, the fact that any grade fuel is recommended is also a plus, especially since it has the same effective power rating as the later normally aspirated engine.

The lack of variable-valve-timing is essentially offset by the added flexibility provided by the extra gear in the tranny.

I drove the Mazdaspeed after looking at the '00 SE and after careful analysis, that helped the decision since the slight improvement in performance of the MazdaSpeed was hardly worth an extra $8,000 to me and the overall amenities of the SE were actually a bit better than the turbocharged car.

The lack of anything but black seats in the MazdaSpeed make it impractical for use with the top down on sunny days. The lighter leather seats of the SE don't get too hot to sit on with shorts.

Plus, I was able to get a very good price for my old RX-7 and that helped the clinch deal too.

Rich :cool:

Originally posted by oaksmith:
If you paid $16000. for a 2000 SE then you got took!! Even if it was low miles and in perfect condition.

[ 10. June 2004, 09:28: Message edited by: Flighttester ]

Achaemenius

10th June 2004, 14:53

r-man

10th June 2004, 21:47

Originally posted by Cliff Knight:

That why I always laugh myself silly (sillier?) whenever anyone talks about an automobile as "an investment"... [/QB]Ditto.

Very scary when your investment counselor says "yeah, I got the S500 because it's a better investment than the E class." I dropped him like hot catalytic converter.

robert

Flighttester

11th June 2004, 09:35

Even one 'bad' investment can be better than another. :cool:

His statement makes sense to me.

A car might not be a financial investment, but it can be an excellent investment in fun, if you pick the right one.

r-man

13th June 2004, 04:16

Sorry, but from my <admittedly different> point of view, cars, boats, swimming pools, deer leases, cigars, fine wines and <some> women are simply very enjoyable wholes into which we throw money... most of which is irrecoverable... :p

Sure, some are "less bad" (LOL) than others, but since the intent of an investment is to grow your money, and cars will absolutely NOT do that (unless you're buying as a business to resale, or intend to keep it a long while, or luck onto a very rare situation, etc).

Saying they're investments is fallacious. You invest in property, commodities, or perhaps your education because they will all make your money grow faster.

An investment in fun? Therapy? Ok, semantics. I just say they are fun, good therapy, and great hobbies...

robert

miatarchy03

14th June 2004, 16:56

Agreed, there are a lot of variations on the meaning of the term "investment". When someone tells you to "invest in a good suit" before going on a job interview, it wouldn't be interpreted as a statement that the suit could be sold for a profit.

Also agreed that different people buy cars with different expectations. Myself, I've always owned older model cars and driven them until they are worthless, so resale value never figured into my choices, until I bought my new '03 Miata.

Even those lucky individuals who do buy appreciating classics (like the Ferrari GTO for sale in the 68 Road&Track for $3800)seldom come out ahead once you look at what they spend on maintenance, and compare inflation and alternative investments.

Still, for those of us who feel the need to be entertained by our cars, and who secretly feel our purchase is regarded by others as a frivolous indulgence, it is nice to have some counter-arguments, even if we use them mainly on ourselves.

I may not be financially ahead of the neighbor who bought an Accord, 6 or 7 years from now, but based on the fun I've had from my purchase, I'll be way ahead of him.